HUD has approved a “pass-through” option in which Northland Investment Corp. would find the new landlords and give them the subsidies Northland now receives for the apartments at Church Street South.

Close to 20 families have been moved to hotels because of conditions in their units, particularly the presence of mold and the negative impact that has on children and adults with asthma.

The New Haven Legal Assistance Association, which has sued Northland over the conditions at the apartments, predicts there will be many more tenants who will need to move while their apartments are fixed or they are housed permanently elsewhere.

“This is a positive step forward for the residents of Church Street South,” Rhonda Siciliano, spokeswoman for HUD’s New England region, said in an email.

HUD was also happy that Northland on Thursday reached out to Elm City Communities, the city’s housing authority, for “their assistance in identifying suitable replacement units for the tenants,” Siciliano wrote.

Northland was found in default of its contract with HUD to provide “decent safe and sanitary” conditions at the 301-unit housing complex for which it receives some $3 million in rental subsidies.

The owner already has agreed, after discussion with New Haven Legal Assistance Association, to pay for hotels for tenants with medical issues, conduct air monitoring of the apartments and follow a protocol for notifying residents whose apartments have to be fixed.

Serena Neal-Sanjurjo, executive director of the Livable City Initiative, said she arranged the meeting between Northland and Karen Dubois-Walton, executive director of Elm City Communities, because “they have the most experience with relocation in the city and have done a stellar job on other projects throughout the city.”

“We want to ensure Northland has a process for relocation that is thoughtful and has the best interest of our residents as part of their plan. ... Our concern is the 289 families that live at Church Street South and ensuring that they are supported through a process that can be overwhelming under normal conditions,” Neal-Sanjurjo wrote in an email.

Northland will meet with HUD Tuesday in Boston to discuss the “pass-through” option, which is temporary and usually is available when a housing facility has suffered a fire or natural disaster. Under this arrangement, the Section 8 subsidy stays with the complex.

The other option involves Northland giving up a portion of its subsidy, which would then fund vouchers so tenants could move anywhere.

Siciliano said both will be on the table in discussions Tuesday.

“There is still much work that needs to be accomplished but we are confident that by working together we will improve the lives of the residents at Church Street South,” Siciliano wrote.

Northland wants to turn the valuable property into a mixed-use development with some 800 units of housing, a portion of which would be affordable.

It is also under orders to fix more than 40 apartments, including 17 roofs. Replacing one was estimated to cost $177,000.

Northland, which has owned the complex since 2008, is looking to make the deteriorating 47-year-old complex safe, while not putting more money into it than it has to.

The city has pushed for repairs in other years, but this concerted effort was sparked by the NHLAA lawsuit. Inspections by New Haven’s Livable City Initiative has found widespread neglect.